Public relations firms are competing for fewer clients with larger budgets, a new study by the USC Annenberg Strategic Public Relations Center suggests.

Only 79 percent of Fortune 500 companies worked with PR agencies in 2005, a decline of 9 percent from the previous year.

However, while the overall number of organizations using agencies dropped, the average percentage of total PR budgets allocated to agencies increased by 25 percent. Most Fortune 500 companies worked with three or four agencies, and smaller companies worked with one or two, making the traditional “agency of record” an anomaly.

The study, titled GAP (Generally Accepted Principles) IV, also provided a look at the ratios between PR budgets and an organization’s gross revenues. Last year Fortune 500 companies averaged $646 spent on PR for every $1 million in gross revenue, and smaller companies averaged $962 spent on PR for every $1 million in gross revenue. Data from previous studies show consistency in the PR/GR ratios.

“GAP data made it clear that 2002, and especially 2003, were bad years for the profession, while 2004 was a bounce back year marked by great, perhaps excessive, optimism,” said Jerry Swerling, director of the center and principal investigator on the study. He said 2005 could become “the perfect benchmark year a vintage year against which to gauge future progress.”

Organizations tended to see PR as a contributor to the bottom line, especially if the PR department reported to the “C-suite” (chairman, chief executive or chief operating officer). Nearly two-thirds of all respondents, and 77 percent of Fortune 500 corporations reported to C-class managers, the study found. Chief executives at these companies were much more likely to believe that PR contributed to sales and financial success than the leaders at organizations where PR reported to the marketing, HR or other departments within the company.

The average public relations budget grew 4 percent last year, according to the study. When asked about budgets for 2006, respondents forecast an average increase of 5 percent.

The GAP IV Study is available for free at the center’s Web site, www.annenberg.usc.edu/sprc.

Selling Small


In Los Angeles last week, Reed Elsevier Group plc decided to sell small, and Canon Communications agreed to buy.

Los Angeles-based Canon announced an agreement in principle to purchase eight trade shows and one magazine from Reed Elsevier. All the properties deal with U.S. advanced technology-based manufacturing.

The sale signals a strategic shift for both companies. Canon was acquired last year by Apprise Media LLC, a holding company controlled by Charles McCurdy, who now serves as Canon’s chief executive. McCurdy was co-founder of Primedia, the fill-every-niche publisher best known in Los Angeles for buying the Petersen magazines.

With Canon, McCurdy has started once again to assemble a collage of small, unrelated pieces. Besides Canon’s 16 magazines and related Web sites and events mostly about engineering and medical tech McCurdy has acquired Beckett Media, which owns magazines for card and memorabilia collectors, and Action Pursuit Group, which publishes for the automotive aftermarket.

Now add the Reed Elsevier properties. The trade shows include Assembly Technology Expo, National Manufacturing Week, International Powder & Bulk Solids, Quality Expo, and NEPCON East/Assembly East. The sole magazine is Powder/Bulk Solids, a complement to the show of the same name.

The Apprise portfolio now stretches from the auto enthusiast to higher technology. While each individual outlet functions in its sphere, it’s hard to see how accumulating these disparate pieces adds any value. Worse, it bears an eerie resemblance to the Primedia experience. After an acquisition binge in the 1990s, the company has reversed direction and sold properties (Seventeen, New York, About.com) while it seeks profits and a new identity. The stock, which traded in the high $20s and reached $33.50 in 2000, now hovers slightly below $2.

For Reed Elsevier, publisher of Daily Variety and owner of Nexis/Lexis, the sale represents a move toward the consumer side of media. “The company’s Reed Exhibitions unit will increase its focus on the home enhancement, security, luxury and lifestyle, and life science/healthcare sectors where it already manages a portfolio of market leading events,” according to a statement on the transaction from Canon.

Reed Elsevier still owns hundreds of trade shows, so the exchange means more to Canon than Reed Elsevier. But in terms of strategic thinking, Reed Elsevier has moved to align its assets while Apprise has merely collected them. At this turn of the river, selling looks smarter than buying especially when it’s selling small to focus on a discernable strategy.

News & Notes


Gas station patrons can now catch headlines while they pump fuel. In a new partnership, KTLA-TV (Channel 5) will provide 30-second videos of local, entertainment and business news along with static banners of sports, weather and news headlines. AdtekMedia Inc. will narrowcast the content on a screen hooked up to gas pumps. Besides news, the screens will show video and static banner ads in 15- and 30-second spots. The program will reach 250 local gas stations by the end of the year .

Clear Channel Communications Inc.’s KIIS (102.7-FM) nudged out Univision Communications Inc.’s KLVE (107.5-FM) for first place in total listeners, according to Abritron’s recently released winter ratings. KIIS and its contemporary hits drew 4.9 percent of the audience compared to Spanish romantic KLVE’s 4.8 share. Spanish Broadcasting System’s KLAX (97.9-FM) finished third with 4.3, followed by Univision’s KSCA-FM (101.9-FM) at 4.2 and Clear Channel’s KFI (640-AM) with 4.0 .

The Los Angeles Press Club will honor Larry King, host of CNN’s “Larry King Live,” with its President’s Award for 2006. He will receive the award at the Southern California Journalism Awards on June 24 at the Millennium Biltmore Hotel in downtown Los Angeles. King has hosted his namesake call-in show, CNN’s highest-rated program, for more than 20 years .

Assemblyman Keith Richman, R-Granada Hills, has named KHTS (1220-AM) the Small Business of the Year for his district. Carl and Jeri Goldman, who bought it back from Clear Channel Communications in 2003, own the Santa Clarita-based broadcaster. The couple will receive the award on May 30 during a Small Business Day ceremony in Sacramento.

Staff reporter Joel Russell can be reached at (323) 549-5225, ext. 237, or at

[email protected]

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